When it comes to traditional lending, your options can be quite limited. From being held back due to a low credit score to not having enough money for an ample down payment, there are numerous caveats to traditional home mortgages. However, for those who have served in the military, another option might be on the table — and one that is far better than traditional loans. A VA loan is often an excellent choice for those who are eligible as the requirements are less strict, the rates in many cases better, and the options for down payments laxer.
If you are considering a veterans home loan, we invite you to reach out to our team. We will work with you to ensure you are eligible and that you are getting the most you can out of this benefit. In the meantime, check out these five important things that you should know about utilizing your VA loan.
#1: It Is For More Than Just Veterans
First off, a veterans home loan is for more than just the person who served. Generally speaking, to be eligible for this unique home mortgage type, you need to have completed six months of service as an active duty member. Reservists in the National Guard can also become eligible, but it is usually after six years of service.
However, beyond just the actual person who served in the military, the benefits of a VA loan can extend to the person’s spouse. In order for a spouse to qualify for the use of a VA loan, the person who served has to have died while on active duty or as a result of a service-related disability. Another stipulation of utilizing a VA loan as a surviving spouse is that you cannot have remarried.
If you are a surviving spouse of a veteran and you are interested in utilizing this benefit, reach out to our team. We can work with you to determine whether or not a VA loan is the right fit for your situation.
#2: You Can Have A Less Than Perfect Credit Score
One of the biggest benefits of a VA loan is that the stipulations surrounding it are much laxer than traditional mortgages. In the case of a veterans home loan, you can potentially still acquire the loan with a credit score as low as 600. This makes it an excellent choice for those who have fallen upon financial difficulties at some point and are no longer eligible for a good loan rate through traditional means.
Keep in mind, though, that even if you can still acquire a loan with a lower credit score, it is always wise to try to improve your credit score as much as possible before application. The higher your credit score, the better the chance of approval and the better options that are available for you. Spending a year working on increasing your credit score is often the best choice prior to going through the home buying process. If you aren’t sure whether or not your credit score is where it needs to be, talk to your VA loan specialist and find out what path will be ideal for your needs.
#3: It Needs To Be Utilized For Your Primary Residence
In order for you to be able to utilize your VA loan, you must promise to take up permanent residency in the home you purchase with the loan. You are given a reasonable period of time to make the transition into your new home, but the regulation is there to preclude you from using your VA loan to purchase a timeshare, summer home, or other property that you would not be using as your primary residence.
For this reason, it is important to wait to use your VA loan until you are certain about where you plan to live. While renting allows you to move around at will, once you purchase a home with your VA loan, you need to utilize this property as your primary residence. This will make it much more difficult if you plan to move again down the road. Take time to consider the location of the property you wish to purchase prior to committing your VA loan to it.
#4: Loan Amounts Can Be More Than Traditional Options
With a VA loan, you are offered a chance at qualifying for loan amounts that are larger than traditional Fannie Mae or conforming loans. In some cases, you can qualify for amounts over $417,000 dollars. This allows you the chance to invest in the home of your dreams, rather than simply getting by with a home that will do.
For this reason, your VA loan is a great chance for you to shop around and think about your future. Do you plan to have kids down the road? Are you hoping for a nice office space in your next place? Take all of these things into consideration as you look for the right property. Since you have a unique chance at a higher loan amount than normal, you might as well utilize it to purchase the right long-term home for your family.
#5: You Don’t Need A Down Payment
Finally, if a down payment — or the lack thereof — has been holding you back from purchasing a home, a VA loan might be the ideal solution. With a veterans home loan, you do not need to have a large amount of money to put down up front. In fact, you could actually acquire a loan without any down payment at all. Not only that, but when you utilize a VA loan, even if you don’t have a down payment, you are not required to purchase private mortgage insurance (PMI). This can be a huge money saver for many with a tight budget.
Keep in mind that while you can still qualify for a VA loan without putting down any money, having a down payment will help to reduce the amount you pay in VA loan funding fees. For this reason, if it is at all financially possible for you to save up for a down payment, it is ideal to do so.
If you are interested in applying for a VA loan, we invite you to reach out to our team today. We look forward to helping you take advantage of this outstanding benefit.